April 06, 2017

China Social Media Review - Week of March 27-April 2

By Meredith Sun
China’s social media was bombarded last week by commentary about China’s central government creating a special zone south of Beijing to help take on some of the capital's functions.

On March 31, China’s central government announced it would set up a new special zone, south of Beijing, called Xiong’an on April 1 to help take over some of the functions of the capital in Beijing. This new zone will have a higher strategic position than Shenzhen’s Special Zone (Shenzhen is one of China’s four tier-1 cities and has been built up from almost nothing 30 years ago) and Shanghai’s Pudong New District (China’s current financial center) and is expected to get a high level of support from the central government. The announcement also used a very rare word to describe this new zone that translates to “a big plan that will have thousands of years’ influence.” This unexpected big news shocked the public significantly and was quickly interpreted by the public that China is going to build up an economic zone in a place not many people have even heard of. Tencent Holdings Ltd.’s WeChat Index of Xiong’an soared up to more than 100 million within a day.


Xiong'an trending on WeChat                                                      Location of Xiong'an

This new special zone covers a 100-square-kilometer (37-square-mile) area of three small, underdeveloped counties surrounding a huge wetland in the Hebei province, 162 kilometers (100 miles) away from Beijing. The announcement said Xiong’an will take over “non-essential” capital functions from Beijing, meaning universities, research institutions and state-owned enterprise headquarters would move from Beijing to Xiong’an, to help ease the heavy pressure of overpopulation, pollution and increasing home prices in Beijing.

Unsurprisingly, the government-controlled media praised this decision and expects Xiong’an to bring synergy to the economic growth of China. But on social media, the broader public comments were much less positive. People’s attention was mainly focused on three points:

1. Home Prices: Right after the announcement, thousands of people rushed into the new zone to buy houses, believing prices would soar. Within 24 hours of the announcement, housing prices in these three counties increased from 6,000 yuan ($871) to 25,000 yuan ($3,627) per square meter. But the government almost immediately shut down all real estate agencies (see photo, left), froze all home transactions in the area, and announced that all the houses in the new zone would be provided only through renting. However, many people still figured out ways to find sellers of property and willingly made underground transactions, and the local government even had to arrest some of the home buyers. The most popular social media comment on this point was, “Thirty years ago, when [people] heard Shenzhen became a special zone, so many people were excited and rushed to Shenzhen to start a business or a career. Today, when Xiong’an became a special zone, so many people were excited and rushed into Xiong’an to buy [a] house.”

2. “A big plan that will have thousands of years’ influence”: This is a phrase that is rarely seen in government announcements, and it concerned many scholars and economists. On WeChat Friends Zone, several popular articles analyzed the very few strategies that were previously characterized this way, most of which indicate Xiong’an could get an unprecedented level of support from the central government and could also indicate aggressive attempts by the government to dominate economically. One popular comment said, “Wow, all the houses will be owned by the government and people can only rent from government — are we back to command economy again?”  

3. Doubts on Execution: Economists have concerns around Xiong’an’s location, the capability of the government and potential economic headwinds. Although Xiong’an is close to Beijing and Tianjin, it does not have direct access to rivers or the sea, a transportation disadvantage compared with Shenzhen and Shanghai Pudong. Northern China historically has had no success with several of its new economic zones during the last 15 years (albeit, new zones have typically been at a lower, municipal government level) and even turned into ghost cities. Overall, Northern China fell behind Southern and Eastern China significantly, which increased doubts for some whether the Northern government can execute such a big strategy. One highly regarded economist said, “The future of this new special zone will entirely depend on how much support it can get from the central government.” Lastly, when compared to the setup of Shenzhen and Shanghai Pudong, the success of these two special zones was largely because of the fast economic growth of entire country at the time, while right now, China’s economy is slowing and political constraints on economic growth will add difficulties to the success of Xiong’an.

(Screenshots from WeChat)

Contributors: Carin Davenport

What is an OTR Snapshot?

OTR Snapshots are direct feeds from our editors expressing their views on key issues and events in their industries, within and beyond our core coverage. Snapshots feature industry insights, source commentary, and general observations.